Build it and they will come, the optimists like to believe - but what if you don't have enough seats for everyone who does show up? That's kind of dilemma Fiji Water has been enduring as spring turns to summer, with sweeping rebranding apparently achieving striking success in re-energizing consumer base - just as supply squeeze stemming from double-whammy of West Coast port slowdown and drivers' strike has insured that not all those consumers will be adequately served. "Very, very limited supply for months due to the port issues. Most promos have been canceled," reported one distributor.

Tho situation has been abating in recent weeks, it hasn't done so quickly enough to replenish warehouses as peak selling season hit on Memorial Day, and LA-based unit of Roll Int'l faces "4 to 6 weeks of difficult decisions on who gets (product) and who doesn't," said another distributor - all at time that many distributors have been running 30% up on brand, thanks to rebranding and Fiji's first national TV campaign. "It was all working perfectly," he added ruefully.

Recall that, against considerable skepticism from some in bottled water biz, Fiji debuted new packaging look at beginning of year featuring hibiscus flower on front panel. Then, in Feb, came debut of what was to be $30 mil marketing campaign under rubric "Untouched," with 15-second TV spots heralding pristine source of water on Pacific island. "Bottled at the source. Untouched by man. It's earth's finest water," kid's voice intones in some spots. It's not clear whether, in light of supply crunch, Fiji has stuck to full marketing commitment.

Calls last week to Scott Parido, svp of US retail sales, and to pr rep Lauren Murray have drawn no response yet. Still, given tricky situation, some observers say co has maneuvered reasonably well to keep critical markets like NY well stocked, while spreading pain elsewhere. "I've been impressed with how creative they've been in thinking on their feet and getting product to where it's needed," a distributor noted. "They were dealt a couple of bad hands." Meanwhile, with high-end bottled water segment thriving, several distributors noted that they've sought to cushion blow by working new breed of entries under names like Essentia, Aquahydrate and Core Water as supplies of Fiji gradually move back into balance. Whether Fiji glitch moves some of them closer to igniting will be interesting theme to observe this summer.  

It may one day go down as landmark day in soft drink biz: giant Reyes beer-distribution org is now rolling on streets of Chicago and northwest Ind as Coca-Cola's newest franchise partner. Does that presage, down road, mingling of beers and sodas on distributors' trucks or, less sweepingly, opening of Reyes' powerful network of beer houses to NA bevs? It's too early to speculate, but that's hope of some who'd like to see more options for NA brands at time that indie DSD system has shriveled. Reyes rep today said co won't be ready to talk about transition until it has a few more miles under its belt.

Operating as wholly owned unit of Reyes Holdings, Great Lakes Coca-Cola Distribution is focused strictly on Coke brands, including broad CSD portfolio, noncarb entries like Vitaminwater, Fuze Tea, Honest Tea, Dasani Water and Zico Coconut Water, and ancillary brands like Monster Energy, Peace Tea and Core Power protein bevs. Deal puts most valuable soft drink brand in nation's 3d-largest metro into hands of powerful beer distributor and food supplier to McDonald's that is broadly envied for its operational sophistication and that boasts of delivering 800 mil cases of food/bevs annually, including in operations outside US. But Reyes also has been famously averse to accumulating portfolios of NA brands within its beer operations, including Chicago Beverage Systems, with view that emerging brands too easily flee to other systems and in any case don't often offer growth and margins of more promising alc-bev sectors like craft beer. Picking up Coke rights in Chicago is no contradiction to that view, since Reyes has separate Coke biz with full franchise protection there. But move has fostered hope in some circles that success operating Coke biz will soften co's stance to NAs in its beer operations. Note that, while KO still refers to these as "bottler" deals, under its current strategy, newly awarded franchisees don't do any actual bottling, instead taking delivery of 3d-party goods produced by Coke itself or its outside copackers.

"Today marks a major milestone for Reyes Holdings, uniting our logistics competence with the world's most iconic and refreshing brand," said Reyes Holdings cofounder and co-chmn Chris Reyes. Some believe Reyes Holdings may be engaged in talks with Coke about picking up other territories as soft drink marketer moves toward refranchising bulk of N America, tho cos haven't commented on that. To run Great Lakes unit, co has assembled mix of old Reyes hands and incumbent mgrs at Chicago unit of CCR. From Reyes Holdings side have come Dan Doheny as chmn, Ed Lorenz as coo, Carl Rommel as vp finance and Marty Slevin as dir of human capital. From KO side have come Luke Emery as gm and Russ Johnson as IT Director. Andrew Reyes, from Reyes' Reinhart Foodservice unit, is serving as Emery's asst gm.

For Coke, it's chance to inject greater entrepreneurial energy and tighter execution into its US distribution system while also fostering closer local ties at time its CSD brands face broad array of policy challenges, in contrast to rotating array of execs who tend to populate regional units of Coca-Cola Refreshments, as it calls KO-owned bottling system. "As we have said, the Coca-Cola System should be a reflection of the communities where we operate and the consumers and customers that we serve," said Sandy Douglas, prexy of Coca-Cola North America. Today's transition "is further evidence of that commitment."

It stands as relative footnote, but KO also closed on another, much smaller deal today in central Fla: longtime consultant Troy Taylor began operating as Coca-Cola Beverages Florida. "It's always been my dream to be a Coca-Cola bottler and today I'm honored to establish a locally owned and operated bottling operation in the state of Florida," he said.  

Heineken raises high-bar for mktg work thru “internal creativity scoring system,” known as “ladder” to 1500 Heineken mktg employees in 70 countries, Ad Age reports. The co seeks internal score of 7 or higher, achieving “talkability” goal needed for “core brands,” exec director for global mktg Soren Hagh told the paper. The co heads to annual Cannes Lions Festival of Creativity, beginning this week, to accept 2015 Creative Marketer of the Year award, announced late last fall. Lauded Most Interesting Man campaign gets 8 or 9 on “ladder,” part of Heineken’s “Global Commerce University” that connects and trains its mktg teams. In rating system, a 4 is “nothing but wallpaper,” just “cliché,” and a 1 is “destructive,” Hagh told AdAge; “anything below a five is a massive no-no.” Heineken’s 2015 Cannes Lions win marks its 2d in a decade, according to AdWeek. Individual campaigns have won plenty of smaller awards at annual Creativity Festival too. And high internal marks lead to growth in marketplace, HUSA CMO Nuno Teles told AdWeek, citing recent growth of Heineken, Strongbow and Dos Equis, at 2%, 117% and 9% respectively, seemingly using scan trends. 

In a survey of on premise chain accounts, Boston Beer “showed the biggest increase versus all beverage alcohol suppliers compared to their scores from last year,” found CM Profit Group. Boston ranked 3^rd overall with E&J Gallo and Constellation Wine taking top 2 spots among chains.  “Operators have set the bar high, in that they demand much from their suppliers,” noted partner Tom Fox. “Suppliers who score well are the ones who know their mutual target consumers well, and package insights on how to take advantage by offering executable solutions,” he added.  MillerCoors and AB were ranked behind Boston in beer category, while Constellation beer was ranked highly in fine dining category.  Overall, retail chains found most suppliers are still not meeting their demands. “While it may seem fairly fundamental to know your customer’s goals and strategies, less than half of suppliers” in survey “exceeded expectations,” added Tom.   

Lengthy 2-part article on ABI debuted this morn in Financial Times on AB InBev, interviewing Brito, who offers matter-of-fact observations on ABI’s culture and looks back at InBev’s 2008 takeover of ABI: “In any company, there’s 20 per cent that lead, 70 per cent that follow and 10 per cent that do nothing…. So the 10 percent that do nothing you have to get rid of…. They’re always unhappy and always complaining.” What about all the sr execs that left?  “Some were too rich to care, some were too old to work, some wouldn’t fit the culture anyway,” Brito said. 

Meanwhile, ABI’s global mgt training programme gets nearly 100,000 applications for 147 slots.  To be a GMT is very much in demand.  And why not?  “Considerable rewards in cash and equity are available to those who hit tough targets at company, unit and individual level,” wrote FT, citing Brito’s approx $280 mil in options.  And while FT cites one former sr AB exec recalling “with something like awe, how the company took tough decisions without emotion based only on the best interests of the business,” others “are more critical.”  A Belgian union official complains about “petty approval requirements for reordering printer ink” and sez “bosses are only in place for three years maximum and then they have to go somewhere else.  We have a culture that’s not longterm—nothing is stable.”  On Glassdoor website staff and former staff rate ABI lower than AB’s 3 “main rivals,” SABMiller, Heineken and Molson Coors, “in every area except career opportunities and business outlook.”  Comments that are “impossible to verify,” notes FT, “refer repeatedly to the pressure.”  But other young ABI execs are described as so ardent in their enthusiasm that they are referred to as “brainwashed.” 

Bill Pananos, longtime leader of Crescent Crown distrib in Louisiana passed away suddenly over the weekend. He led Crescent Crown as exec veep and gen mgr since 2001. Bill was a “dynamic leader, trusted confidante, close colleague and most importantly a true friend and mentor,” wrote Crescent Crown president Bubba Moffett.  “Great guy and a true beer executive…. Hard working, savvy and always a good word to say no matter what the circumstances,” said Luis Duran, ex-FEMSA and Heineken exec in US.  Our thoughts go out to Bill’s family, co-workers and friends. 

Two key execs in multi-yr success stories of top alc bev cos announced their resignation this morn.  First came Bob Ryder, 55, and Constellation’s cfo since 2007.  Bob led STZ finance as co underwent remarkable transformation in recent yrs, especially in beer.   He’ll leave following completion of STZ’s first qtr financial report. Recall  that 2007 was 1^st yr Crown got rights to Modelo’s brands in other half of US. Then, following ABI/Modelo deal, Constellation bought 50% of Crown that it didn’t own and ultimately bought Piedras Negras brewery as well.  Back in 2006, Constellation made a little more than $200 mil oper income in beer.  Last yr, it made over $1 bil. 

Constellation’s stock price almost 6x more than before ABI did Modelo deal and had to spin off 50% of Crown and Piedras Negras brewery.  Bob got high marks as Constellation’s cfo during this transformation.  He leaves to “seek new challenges and explore external opportunities.”  His departure is “amicable” and “unrelated to the company’s financial performance or financial reporting,” said co in release.  Constellation simultaneously named David Klein, most recently cfo of co’s beer division, as exec veep and cfo of Constellation. 

“The announcement is unexpected and the timing of transition appears relatively quick,” wrote Goldman Sachs analyst Judy Hong.  Bob Ryder “highly regarded by investors…. We take comfort” that departure “amicable” and “unrelated” to financials and that David Klein is “an experienced financial executive.”  But Mark Swartzberg wrote: “We consider this negative in spite of our confidence in David Klein,” replacing Bob.  “The multiple could see sustained pressure in the absence of any clarity from CEO Rob Sands about intended cash returns as capital spending in Mexico slows down.”  Bob generally seen to have added financial discipline at co that sometimes used to be known for doing a lot of M&A.   Stock down about 3% today. 

Diageo’s longtime head of US spirits, Larry Schwartz, 62, announced he’ll leave at yr-end this morn.  Larry was most recently prexy of Diageo North America, largest and most profitable unit of world’s largest distiller.  Before that he was prexy of Diageo USA.  He started at Seagram in 1975.  Larry had stellar career building spirits brands in US, but more recently Diageo under pressure on several fronts, including even its US biz.  

Yet more evidence of the recent funk for beer sales;  scan data trends worsened again. Last week we reported beer down 0.5% for 4 weeks thru May 31.  But now beer volume down 1.9% for 4 weeks thru Jun 6 in just-released Nielsen all outlet + convenience data.  A number of distribs INSIGHTS talked to in different parts of US have described similar experiences, where 2d half of May got very soft and unfortunately that has so far continued in early Jun. Some blamed weather, but folks we talked to are still not entirely sure what’s going on.  Premium lights dropped 4% latest 4 weeks and all below premiums dropped 5.6% for 4 weeks in Nielsen.  Even fastest growing segment, cider, up only 11% last 4 weeks.  

The print edition of the 2015 Beer Industry Update will be available Monday.  Take this last opportunity to order your copy at the pre-publication price and save $100.  You name it, the 2015 Update's got it: industry trends, brewer/importer numbers, segments, brands, region/state data, retail data and much, much more in detailed tables, text and graphs. You get insightful analysis from execs with decades of experience tracking the US beer biz. Update is also available as a CD-ROM.  We can also e-mail files for those who need the data immediately. Print version to follow. Click here for details. Click here to order.

The 16-page Jan, 2011 contract between Pabst, then owned by Dean Metropoulos and sons Daren and Evan, and Snoop Dog (Calvin Broadus, Jr) that the rapper is using to claim a share of Pabst’s purchase price paid by Eugene Kashper/TSG last yr (see Jun 9 Express) has some other interesting clauses as well. Snoop Dog became a “consultant” to advise Pabst’s “Colt 45 team on the marketing and launch” of Blast, to “provide input” on promo materials, “additional flavor concepts” and the ways he could promote the brand in live appearances, on social media, etc. Snoop promised to attend a certain number of meetings/events, be available for photos, make videos, have the brand graphics on tour buses and “integrate” the Colt 45 brands into lyrics, live performances, media appearances, Facebook/Twitter messages and more. 

For his services, Snoop got: 1) a $250K annual fee; 2) performance-based compensation of 25 cents/case on 1-1 mil cases of Blast, 30 cents/case on 1 mil-2 mil cases, 35 cents/case for over 2 mil cases (or an option for a piece of the gross margin); 3) per case royalties on other Colt brands sold over specified goals; 4) a 10% royalty on Colt 45 merchandise, higher if the merchandise included Snoop’s name or “likeness”; 5) “brand ambassador bonuses” of $20K “upon the 10^th mention” of the brand and/or “while wearing Colt apparel,” another $20K on the 20^th, 40^th, 60^th etc appearance, topping out at $120K; 6) a “brothers” bonus (not actually called this) of $2500 for the 5^th instance of mentioning either Daren or Evan’s name, $5K for the 10^th time, $10K for the 25^th time; 7) the “phantom equity” at stake in the lawsuit; 8) travel expenses, for a party “not to exceed 7 people” when Snoop “in performance of his duties.”  All this from a company that spent virtually nothing on measured media.  Nice work if you can get it.  Snoop probably did not get much in the way of royalties.  Blast never sold much and the brand family shrank from 10.2 mil cases in 2011 to 7.8 mil cases last yr. 

By the way, Pabst put out a statement in response to the suit.  “Pabst Brewing Company has been under new ownership and new management since November 2014. We have not been contacted by Snoop Dogg or his representatives about this issue. [Lawsuit said Plaintiffs reached out to “Pabst,” tho did not say specifically the new owners.]  We are investigating the matter and would be happy to talk to Snoop or his representatives to try to get to the bottom of this.”